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After the Bell: What if you asked AI about the future of AI?

After the Bell: What if you asked AI about the future of AI?
Tim Cohen
By Tim Cohen
2 Jan 2024
Facebook
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Artificial intelligence, it turns out, has a very positive outlook for itself. But the devil is in the detail — and some of its predictions are not entirely impressive. In the end, there are lots of things we don’t know; what we do know is that it’s here to stay.

Perhaps the most salient event in business, and society for that matter, in 2023 was how artificial intelligence burst into public prominence. So a big question for 2024 is whether this will continue.

Well, this is artificial intelligence we are talking about, so let’s ask it. That way we can see if AI is a good predictor of something it presumably knows a lot about – itself!

So I asked ChatGPT: In 2023 artificial intelligence burst into public consciousness. Do you think that will continue in 2024?

Shockingly, or not, ChatGPT was positively exuberant about itself.

Its answer was “Absolutely! The pace of AI development has been consistently accelerating, and it’s likely to continue capturing public attention in 2024.

“New breakthroughs, applications, and debates around AI ethics, governance, and its impact on various industries and society will likely keep it in the spotlight. The advancements in AI are so multifaceted that they touch almost every aspect of our lives, from healthcare to entertainment, economics to education. So, buckle up for more exciting developments and discussions on AI in the coming year!”

This sounds very much like a press release. What about some more probing questions? It asked me: “What specific aspects of AI are you most interested in?”

Shares


One of the things I’m interested in, and I presume the entire investment community, is what shares you should buy to take advantage of the AI trend. There is a kind of technical warning that you should take care when investing, but generally it suggests the obvious: Google, Microsoft, Amazon because they are heavily invested in AI research; Nvidia and AMD because they provide hardware; Palo Alto Networks and CrowdStrike for cybersecurity; and iRobot and ABB for robotics.

One of the interesting aspects of large language models is that, after continual questioning, they can sometimes “hallucinate”. But it’s possible that, even at question number two, hallucinations are already evident.

Take Nvidia, for example. The company makes the computer chips that are necessary to create AI models. Crucial, right? It has a market cap of $1.2-trillion and a price-to-equity ratio of 65.

This is just outrageous. Ten years ago it had a market cap of $10-billion; it’s now the world’s sixth-largest company.

In many circumstances, a 65 price-to-earnings would not be ultra-demanding for a high-growth company, which Nvidia undoubtedly is.

But combined with its existing market cap, there is a good argument that revenue-driven growth would be difficult from here. Just for example, if you wanted to decrease the price-to-earnings to, say, 50 – high, but a little closer to reality – earnings per share would have to double.

That doesn’t seem impossible historically: they have doubled over the past year. But doubling again? Tough call. Perhaps for this reason the Nvidia share price has wavered in a range ever since the share price exploded in May.

ABB’s share price was 20% up in 2023, but iRobot’s is down by about the same margin, so if AI is going to assist robotics, it’s not visible yet. The same applies to e-commerce and retail. Alibaba had a terrible year, but Shopify had a fantastic year. AI is just not visible in their earnings yet, either, as demonstrated by the inconsistency.

Healthcare


I suspect where ChatGPT is most interesting about itself is in a field a little more at a tangent: healthcare. The numbers that are being floated are just incredible. One research house, Precedence Research, said the current AI healthcare market was valued at $11-billion in 2021, and that it is projected to be worth $187-billion in 2023.

The areas where AI could be really valuable are in diagnosis and pharmacology, both of which are very expensive at the moment. In both cases, the initial research delivered good results. A published study found, for example, that AI recognised skin cancer better than the best international dermatologist. Harvard’s School of Public Health found that using AI to make diagnoses may reduce treatment costs by up to 50% and improve health outcomes by 40%.

The prospect is that AI could reduce the need to test potential drug compounds physically, which would result in enormous cost savings. In an article in Harvard Law School’s publication Bill of Health earlier this year, the author, Matthew Chun, said it’s possible that high-­fidelity molecular simulations can run on computers without incurring the high costs of traditional discovery methods.

“AI also has the potential to help humans predict toxicity, bioactivity, and other characteristics of molecules or create previously unknown drug molecules from scratch,” he writes.

But it is worth noting that the two stocks ChatGPT suggests in this space, Intuitive Surgical and Medtronic, have both more or less held their own, but have not increased substantially in the past year.

Rough ride


Okay, another question. What would make the shares associated with AI fall dramatically over the next year? Well, there is a lot, but at the top of the list would be regulatory changes and hype correction. Regulators – in fact, the public at large – are a little freaked out by the speed with which AI is becoming mainstream.

Even the crazy firing and rehiring of Open­AI’s CEO, Sam Altman, in some ways reflects a high level of scepticism, doubt and uncertainty that currently surrounds the industry. The answer to some of the biggest questions surrounding AI is simply that we just don’t know.

We just don’t know, for example, whether AI will be a net job displacer. It certainly seems that way, but, historically, tech innovations have often created as many jobs as they destroyed.

We just don’t know what precisely the security and privacy issues will be, and even whether AI will be a useful tool for creatives, even though the early examples are impressive.

Most of all, we don’t know whether AI can reach something called “the singularity”, in which it reaches a kind of superintelligence beyond human capability.

What we do know is that AI will be one of perhaps the top five ­crucial issues of 2024. Hold on to your socks; it’s going to be a rough ride. DM

 

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